Bavarian Motor Works Turns 100 — These Days We Just Call It BMW | QDaily Business History

A car brand that rose on the strength of its engines, the way BMW did, is unlikely to appear again.

On May 20, 1917, a small factory called Bayerische Motoren Werke handed its newly designed BMW IIIa aircraft engine to Idflieg, the German air force's inspectorate, hoping to win a few orders from a rapidly growing air arm.

Air combat was the news that did most for German morale at the time. Just a month earlier, German pilots flying several new fighter types had crushed Britain's Royal Flying Corps, shooting down 275 British aircraft while losing less than a quarter as many of their own.

At the time, Germany's Fokker company was developing an all-metal fighter, the Fokker D-VII, at the army's request.

It became the most successful fighter of World War I, and some versions used the BMW IIIa engine. Manfred von Richthofen, the war's most famous ace, known as the Red Baron, flew it and praised it warmly.

Success in the air counted for little in the war as a whole. By the time the BMW IIIa was submitted, the fighting had gone on for nearly three years. The German Empire's war plans were going badly: the army had failed to take Paris in a quick strike and was bogged down, the navy had failed to break the Royal Navy's blockade, and the whole country was hungry.

Lenin had been sent back into Russia that April, and within months he would lead a revolution that pulled Russia out of the war and freed German troops for a new offensive against Britain and France. But on the very day the BMW IIIa was born, the United States, which had recently declared war, ordered its first troops to Europe.

Germany sued for peace in 1918. The kaiser was deposed, the colonies were carved up, and in its anger the country soon marched toward an even greater ruin.

The engine maker, though, survived. Over the next hundred years it remade itself several times, and under the initials BMW it became a car brand known everywhere.

And just as its first name suggests, BMW's growth is bound up with the uses of one mechanical invention: the internal combustion engine.

The early years: BMW began as a small supplier of aircraft parts

In 1913, the engineer Karl Friedrich Rapp founded a company named after himself, Rapp-Motorenwerke, on the outskirts of Munich. World War I broke out in 1914, and the company's first business was building 12-cylinder aircraft engines under contract for Daimler, which supplied the imperial German air service. Limited in those early years by its machines and its workforce, the company did little more than subcontract work.

In 1916, Franz-Josef Popp, an official Daimler had posted to Rapp-Motorenwerke, took over the struggling firm, which could not mass-produce anything and had gone nowhere commercially. He renamed it Bayerische Motoren Werke — the name it carries to this day, and the source of the abbreviation everyone knows: BMW.

Before World War I and in its early stages, the airplane, a machine that had become practical only recently, was not yet a weapon. Austria had used aircraft to drop incendiary bombs on Venice as early as the 1840s, but through the first part of the war both sides still used aircraft only to set out balloons and scout; the planes carried no weapons. In the plans of the general staffs, these toy-like things were meant only to spot enemy positions and help the artillery adjust its aim.

But pilots on both sides brought pistols and machine guns aboard to defend themselves, and shooting at each other in the air became the beginning of aerial combat — which in turn pushed the airplane further toward being a weapon.

Air combat then was still small in scale, nothing like the efficiency of World War II, when a thousand planes could be shot down in a day or two hundred thousand people burned to death in a single night. The air force was still an auxiliary arm, and an excellent tool for lifting morale.

Cavalrymen had died alongside their beloved horses under machine-gun fire in the war's first months. Infantrymen died by the tens of thousands in the trenches and became food for rats. Propaganda offices cast pilots as knights of a new age, to give soldiers waiting to die and civilians going hungry something to hope for.

BMW's new engine arrived just in time for this business.

BMW's first engine, the BMW IIIa, was fitted to the famous Fokker D-VII biplane fighter. The D-VII was one of the best-known aircraft of the German air force in World War I, and it held an overwhelming advantage over Allied planes: in August 1918, its second month in the air, it scored 565 victories. The ace Erich Löwenhardt and the future Nazi leader Hermann Göring both flew this type.

Later-production Fokker D-VIIs fitted with the BMW IIIa had better performance at altitude, a small technical edge in an era when most aircraft engines could not put out enough power up high. On September 3, 1919, a Junkers F.13 transport powered by the BMW IIIa set the altitude record of the day: 6,750 meters.

But airplanes did not help Germany and the Central Powers win. On May 20, 1917, the United States, which had declared war on Germany, sent its first troops to Europe; the day before, the Fokker D-VII had won an order and was being prepared for mass production.

Before that, the D-VII had been test-flown by the Red Baron, Manfred von Richthofen, but the day before it entered combat he was shot down and killed in a dogfight over the Somme battlefield in France.

The D-VII was deployed to Jasta 11, the squadron the Red Baron had belonged to, and it fought brilliantly. Still, on November 11, 1918, five months after the D-VII entered combat, World War I ended in defeat for Germany and the Central Powers.

From building engines, BMW gradually gained the ability to design them

The year BMW was founded, Gustav Otto set up the Bayerische Flugzeugwerke (BFw) nearby. BFw merged with BMW after the war.

But once the war ended, the Treaty of Versailles confiscated the aircraft of the defeated German air force, shut BMW down, and barred BMW and many other companies from building aircraft again.

BMW turned to industrial engines, farm machinery, and motorcycles. Like most German war plants, it never lost its skill in mechanical design and manufacturing, and neither the war nor the treaty had wrecked its factory buildings.

BMW's tractors and motorcycles of that period simply reused its aircraft engine technology, because in that era these engine technologies were, at bottom, much the same thing.

In 1928, after several years of struggle, BMW bought the German carmaker Eisenach and began building the British Austin Seven under license, selling it as the Dixi 3/15. BMW's car business began with a badge-engineered product. Its first aircraft engine, the IIIa, had not been an entirely original design either: it was an improvement on the Daimler engine the company had once built under contract.

Two years later, BMW released an improved version, the DA2, which stood for "German Version 2." It was a modest success, selling 18,000 cars in three years. In 1933 came an important model in BMW's history: the BMW 303. It was the largest car BMW had built, with a 2,400 mm wheelbase, powered by a BMW-designed and BMW-built inline six-cylinder engine of 1.2 liters that produced 20 horsepower at 4,000 rpm.

The 303 was the first BMW with two separate air intakes at the front — the ancestor of the kidney grille that has been the signature face of every BMW since.

The 303 was not an outstanding car for its time. Set against the Mercedes-Benz 770, it fell short on performance and on luxury. The 770 luxury sedan, launched in 1930, had a 7.6-liter inline eight-cylinder engine with a central camshaft; the supercharged version produced 200 horsepower at 2,800 rpm, more than most mainstream family cars make today, and far more than the 303's 20 horsepower. The 770 was the favorite of the Nazi leadership — Hitler, Göring, Himmler, and Heydrich all rode in one.

BMW put out several improved models after the 303 to fix its weaknesses, but its car bodies at the time were built by Mercedes-Benz and final assembly was done by Ambi-Budd. At this stage BMW could not be called a famous carmaker.

BMW's second golden age also came from aircraft. In the 1930s the Nazi Party took power, threw off the restrictions the Treaty of Versailles had placed on the defeated country and, with the tacit consent of other European states, began rearming.

In 1928 BMW bought a license to build Pratt & Whitney's R-1690 Hornet engine from the United States, and five years later released the BMW 132, developed from the R-1690.

In 1935, funded by the Nazi air ministry, BMW obtained the drawings for two more engines; that same year the more powerful BMW 801 was born. In 1939 BMW bought Siemens's aircraft engine arm, Brandenburgische Motorenwerke, merged it with its own aircraft division, and began mass-producing aircraft engines at a new plant outside Munich.

Unlike the inline cylinder layout common in World War I, the BMW 132 and BMW 801 were still piston engines, their cylinders producing mechanical power by reciprocating motion, but the cylinders were now arranged around the drive shaft like the spokes of a wheel, a layout called radial.

This shortened the engine considerably, and compared with an inline engine it allowed more cylinders and more power. The military version of the BMW 132, with nine cylinders, 27.7 liters of displacement and a fuel injection pump, put out 960 horsepower. The 801, with two rows of 14 cylinders and 41.8 liters, put out nearly 2,000 horsepower.

During World War II the BMW 132 went mainly into the Junkers Ju 52 transport, one of Germany's most important transport aircraft in the early years of the war. It could carry 18 fully armed paratroopers, which made possible the rapid airborne assaults behind enemy lines in invasions of countries such as the Netherlands, and it also carried the wounded. When Hitler, who became German chancellor before the war began, chose his first official aircraft, he chose the Junkers Ju 52.

The BMW 801 went mainly into the Focke-Wulf Fw 190 Würger fighter-bomber, one of Germany's most important auxiliary fighters late in the war. As Germany pulled in its front lines and fought the Allies over its own soil, the Fw 190 produced a crop of aces: Erich Rudorffer claimed 222 kills, Otto Kittel recorded 267 victories and Walter Nowotny 258 — most of them flying the Fw 190.

At least 21,000 BMW 132s were built, and more than 28,000 BMW 801s. By improving its designs and expanding production, BMW reached another commercial peak during the war. Its first product, the IIIa aircraft engine, had run to just over 700 units across the whole of World War I. In World War II the airplane had become one of the central forces, no longer something an army could do without.

But BMW went further still with aircraft engines during the war.

In 1940 BMW designed the 003 turbojet; the only other jet engine born at the same time was Junkers's Jumo 004. Both were flight-tested on aircraft such as the Messerschmitt Me 262 and the Heinkel He 162, among the very first jet planes.

On the basis of the BMW 003, the German military also developed a gas turboshaft engine codenamed GT 101, meant as an alternative power source for the Panther heavy tank. In fact, many modern propeller planes, helicopters and heavy machines — the AH-64 Apache attack helicopter, the M1A1 Abrams tank, the V-22 Osprey tiltrotor — run on turboshaft engines. They may look much like their piston-engine ancestors, but the principle is entirely different.

Advanced as jet power was, and even though the Messerschmitt Me 262 was the world's first jet fighter to enter service, it could not save Nazi Germany and the Axis from defeat in 1945.

The BMW 003 was seized after the war by the Soviet Union and France. The Soviet Mikoyan design bureau improved on it to build the MiG-9, the Soviet Union's first jet fighter, and France's Dassault developed its own Snecma Atar engine from it, which later powered the Étendard and Super Étendard.

After World War II, car and aircraft engines took separate roads

When the war ended, Germany was disarmed. BMW had done a great deal for the Nazi war effort, and the Allies barred it not only from aircraft engines but from making any power equipment at all. In the last years of the war Allied air forces had heavily bombed BMW's Munich works, and when the fighting stopped, its factories were rubble.

Until the ban was lifted in 1947, BMW scraped by on secondhand machinery, making small goods: pots and pans, kitchenware, bicycles. In the 1950s, as Germany began to rearm, old arms-industry giants such as Thyssen-Krupp and Messerschmitt went back to making weapons. Perhaps because two catastrophes had left their mark, BMW did not return to arms and instead put everything into cars.

BMW called back several designers and engineers who had left for other companies, hired new people from Opel and elsewhere, and resumed building cars. Technical director Kurt Donath, chief engineer Alfred Böning and sales director Hanns Grewenig each held to a different path. Donath wanted to badge-engineer other companies' models for a quick start; Böning wanted small family cars built around motorcycle engines; Grewenig insisted on large luxury sedans.

The luxury sedan failed. The 501, produced in Frankfurt in 1951, drew attention, but it cost 15,000 marks, four times the average West German income, and clearly had no market. Its improved successor, the 507, with a 2.6-liter aluminum V8, also drew attention and even won an order from an American distributor, but it was priced twice as high as the Mercedes-Benz 300 SL, and that deal was canceled in the end.

In 1954 BMW's motorcycle business peaked and contributed most of the company's revenue, but the company still made no profit, and the car business showed no sign of improvement. That year BMW's head of development, Eberhard Wolff, saw the Iso Rivolta Isetta at the Geneva Motor Show — a one-seat microcar with a door at the front. He thought it suited the German market of the time.

BMW bought the license for the Isetta. In 1955 it sold 10,000 of them; by 1958, 100,000; by the end of production in 1962, 161,728.

The Isetta sold well, but microcars carry thin margins. The luxury cars did not sell and brought in no profit. The motorcycle market was shrinking too, and BMW fell into trouble. In 1954 the company sold one of its plants to MAN, and both America's AMC and Britain's Rootes Group tried to buy BMW outright.

On December 9, 1959, BMW's supervisory board proposed a merger with Mercedes-Benz at the shareholders' meeting. That was the moment of BMW's biggest postwar change: the brothers Herbert and Harald Quandt, of the family-owned Quandt Group, bought up BMW shares and became its largest shareholders. By the end of 1960 the Quandt family held more than two-thirds of the stock, making them the company's real controllers — as they still are today.

BMW chose not to pick up military work again, partly because its old technical records had been destroyed in the war, and because clawing its way out of the ruins twice had been nightmare enough. The other fact was that the piston-driven propeller engines BMW had once excelled at were already obsolete in military use; its aircraft engine experience had fallen behind the times.

The jet engine was an altogether new form of power. The radial engine had changed a great deal structurally, but compared with a modern car engine it was no revolution: pistons still drove it. Only with the turbojets that came into wide use around the Korean War did the principle finally part company with the propeller age. Instead of pistons moving back and forth, fuel drove a fan, and compressed air was blown out to push the aircraft forward by reaction.

Because of the jet engine, aircraft speeds went from under 100 kilometers an hour in World War I to three times the speed of sound — more than 3,500 kilometers an hour — in the SR-71 Blackbird supersonic reconnaissance plane of 1964. From the end of World War II onward, in other words, aircraft engines and car engines were heading in two completely different directions.

In the 1960s, engine performance carried BMW into the top tier of carmakers

At the 1961 Frankfurt Motor Show, BMW launched the 1500 sedan. This car opened the modern BMW line — it is the ancestor of the 3 Series and 5 Series that became the brand's mainstays — and it carried a design feature that survives to this day: the Hofmeister kink. On most BMWs from the 1960s to now, the line where the rear window or rear door meets the D-pillar has a small notch that curves forward. It was designed by Wilhelm Hofmeister, BMW's chief designer from 1955 to 1970, and other brands have borrowed it since.

The other part of the BMW story that has to be told alongside the Hofmeister kink is the New Class. Beginning with the 1500 and running on through the 1600, 1800 and 2000, these small BMW sedans of about 2 liters — a class BMW had not built since the end of World War II — were known as the New Class (in German, Neue Klasse).

The models in the series used MacPherson struts at the front and semi-trailing arms at the rear, had fairly small bodies, and leaned toward handling. They all used the newly designed M10 family of inline four-cylinder, single-overhead-cam engines, from 1.5 to 2.0 liters. Cars with these features set the tone for every BMW that followed: sport and handling. Between 1963 and 1971 the 1600 sold 9,728 units and the 1800 sold 134,000.

The New Class saved BMW. In 1962 the company stood at the edge of bankruptcy, with annual revenue of 294 million marks. In 1963 sales grew 47 percent to 433 million marks, and that year BMW paid shareholders a dividend for the first time in 20 years — its first since World War II.

The M10 engine used in the New Class proved itself on the racetrack. In the 1960s, cars fitted with modified BMW M10 engines won the Formula Two championship. From 1983, the Formula One teams Brabham, Benetton and Arrows ran BMW M13 engines to good effect: in the years the M12 family was in service, Nelson Piquet took the 1983 drivers' championship for Brabham, and other cars took 9 race wins, 15 pole positions and 14 fastest laps.

The 1960s were, in fact, the decade when carmakers everywhere chased performance without restraint.

In the American market of the 1960s, the big four — General Motors, Ford, Chrysler and AMC — all put out horsepower-minded muscle cars. The 1962 Dodge Dart had a 6.8-liter engine and covered a quarter-mile in 13 seconds. In 1964 the Ford Thunderbolt used a 7.0-liter engine, and Chrysler copied the move with a 7.0-liter Hemi to compete.

By early 1970 the horsepower race had peaked. The 1970 Chevrolet Chevelle SS 454 carried a 7.2-liter V8 making up to 450 horsepower. But in 1971 the US Environmental Protection Agency brought in emissions limits, and carmakers could no longer add power by the crude method of adding displacement; they had to find ways to make engines more efficient. The oil crisis of the mid-1970s pushed the horsepower race further into decline.

In 1975 Honda launched an improved Civic in the United States whose new CVCC engine used mechanical parts to achieve stratified combustion, meeting American limits on nitrogen oxides and carbon monoxide without a catalytic converter. After that, Japanese cars — smaller in displacement, cleaner, more practical — began to take over the American market. Even now, Toyota, Honda and Nissan take the top five places on the 2016 list of America's best-selling sedans.

As the internal combustion engine stalls, a story like BMW's is unlikely to happen again

In 1886 Karl Friedrich Benz designed and built the world's first practical internal-combustion automobile. In 1906 he set up a company to mass-produce cars — the company that became the famous Mercedes-Benz.

Benz is called the inventor of the automobile because he pared the internal combustion engine down, made it small and put it on a vehicle. The earliest cars had only three wheels; the four wheels, the roof, the lamps and everything else we now take for granted came later. Back then the engine itself was the heart of the car.

Ford brought the industry to ordinary buyers. In 1913 the Ford Motor Company brought the assembly line into carmaking; before that, putting together a single chassis could take 12 hours, and the assembly line cut it to one. The line drove down labor costs on the Model T so sharply that its price fell from $825 to $290, and by the end of 1918 half the cars in America were Model Ts.

From 1972 on, BMW launched its modern range — the 3, 5 and 7 Series, the 4 Series, 6 Series and other lines derived from those three, plus the X-series sport-utility vehicles first offered in 1999 — and that is BMW's entire product line to this day. Apart from firms that build nothing but supercars, such as Ferrari and Lamborghini, BMW must be one of the carmakers most fixated on high performance.

In 1972 BMW founded what is now one of its star sub-brands, the sports division M Performance. The unit started out building race cars, and after 1983 it began putting out factory-tuned versions of BMW's regular models. These cars looked like ordinary family sedans but carried an M in the name, and their strength made them enormously popular. The latest 3 Series, for instance, uses inline four-cylinder turbocharged engines of 130 to 250 horsepower, while the M3 uses a 3.0-liter inline six-cylinder turbo making more than 430 horsepower.

Mercedes-Benz and Audi, the other two of Germany's three big luxury brands, followed BMW with the same strategy for performance cars. Mercedes's AMG and Audi's R sub-brands work in essentially the same way as BMW's M.

BMW revived on sport and high performance. Other carmakers succeeded for other reasons, but one thing was always the same: they built their own engines. Among the independently run car brands today, even those that have been acquired, most still keep their own engine production lines.

The car industry has long been a business of fine division of labor. The parts of a car you can see — the seats, the glass, the plastic trim — are not made by the carmaker. For most carmakers, apart from the engine, almost all component and electronics manufacturing, and even final assembly of the vehicle, is no longer their own work.

Japan's Asahi Glass, for instance, supplies glass to nearly every car brand; ZF and Aisin build most of the world's automatic transmissions; Bosch and BorgWarner supply all-wheel-drive systems and stability control chips for many models; and several BMWs, including the X3 and the Mini, along with the Mercedes-Benz G-Class, are actually assembled by Magna.

There are companies devoted to internal combustion research and development — Germany's FEV, Austria's AVL List — but they are consultancies. Their main business is early-stage model development and advanced simulation tools. The secret of how to burn fuel more efficiently inside a cylinder still rests with the carmaker.

Look at sales, though, and if you compare cars from different brands at the same price, their numbers turn out to be fairly close. Carmakers advertise their engines as each holding some private trick, but when a buyer chooses between the BMW 3 Series and the Mercedes-Benz C-Class, the deciding factor is not some vast gap in engine power or performance. Sales are shaped more by brand, marketing and the accumulated thing called corporate culture.

The engine is no longer what most sways buyers. In the Chinese market, the trim with the weakest engine but the best entertainment equipment is the best seller within any given model, which shows that buyers, choosing a car, would rather pay for entertainment features and other equipment than for the engine.

Look at the underlying structure. Since Nicolaus August Otto invented the four-stroke internal combustion engine known as the Otto cycle in the 1850s, automotive fuel efficiency has improved dozens of times over, but the core principle has not changed: the mechanical energy still comes from burning gasoline. Energy is lost, though, between the burning and the forward motion, and that conversion rate is called thermal efficiency.

The mass-produced gasoline engine with the highest thermal efficiency today is Toyota's hybrid engine, the 2ZR-FXE, which claims a peak of 41 percent. By Toyota's figures, gasoline engine thermal efficiency has risen from 20 percent in the 1960s to about 39 percent now. After Toyota launched the fourth-generation Prius hybrid, "thermal efficiency raised to 41 percent" became a headline selling point.

In truth, the development of car engine performance passed the stage of necessity long ago. Even a cheap family car costing tens of thousands of yuan has an engine of about 100 horsepower and can go at least 500 kilometers on a tank. In city driving, 100 horsepower is more than enough to reach the 120 km/h limit, and whether a tank lasts 500 kilometers or 600 makes no real difference. For the ordinary buyer, gasoline engine performance is now surplus, no longer an important selling point.

Precisely because there is no car a buyer absolutely must have, competition in the industry is concentrating on the selling end. One report found that in the 2016 American car market, carmakers were spending an average of $4,000 a vehicle on dealer discounts, while the average labor cost of building a car was only about half that. Ford, GM and Fiat Chrysler spent more on discounts; Honda, Toyota and Nissan spent relatively less. As products grow less and less different from one another, more and more is spent on the act of selling them.

By 2016 the number of cars in China had reached nearly 300 million, and the total ever built in human history has to be counted in the billions. From the cutting-edge power source once reserved for aircraft to a tool that has remade civilization, the internal combustion engine has become the most ordinary power source there is.

Prodded by policy and by culture, the gasoline car industry is moving toward being cleaner.

In the future, perhaps after a transitional period of hybrids, battery electric and hydrogen fuel-cell power will become the core of automotive propulsion. To cut costs and scale up, companies around the world will make electric-car parts much as the industry today is organized around the gasoline car. But an electric car's structure is far simpler than a gasoline car's, which means that once you know the battery and the motor, you can pretty much say what that electric car will feel like to drive.

Next to gasoline cars, whose engines already differ only a little from one another, electric cars will differ even less.

A car brand that rose on the strength of its engines, the way BMW did, is unlikely to appear again.

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